Robinhood's (HOOD) revenue based on crypto transactions skyrocketed in the 2nd quarter, with more than 60% of its users trading digital currencies. However the company warned of lower revenue expectations for the third quarter. Shares fell about 5% in after hours.
"For the three months ended Sept 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer funded accounts than in the prior quarter” read the company statement.
Crypto activity surges
The investment app company reported more than half of its total transaction-based revenue came from crypto trading. Crypto transaction-based revenue for the 2nd quarter was $233 million, compared to just $5 million for the same quarter in 2020.
These are the top line and bottom line results posted by Robinhood:
Revenue: $565 million, a 131% year over year increase
Net loss: $502 million, or $2.16 per diluted share
The company only has three analyst ratings so far given the IPO quiet period.
In line with the company's "democratize finance for all" theme, the trading platform has allowed shareholders to submit questions ahead of its earnings call. Questions with the most 'upvotes' will be answered by management.
Robinhood has been a key player in the retail trading boom involving GameStop (GME) and other stocks which retail traders have focused on over the past this year.
The company itself recently became associated with a 'meme stock' when its shares soared 24% one day, and touched an all time intraday high of $85 in a retail-led rally the next day.
"It's still hard to know what the right long term value of this company should be," strategist Matt Maley of Miller Tabak + Co told Yahoo Finance. "I'm one who thinks the longer term players should build their position over time because the stock will be very volatile," he said.
On August 5th the stock tanked 27% after the company announced some stockholders would be cashing out up to 97.8 million shares. Robinhood later clarified those sales were on hold until receiving SEC approval.
Robinhood went public on the Nasdaq (^IXIC) on July 28th with an IPO price of $38/share. The stock closed down 8% on its first day of trading. In an unusual move, the company had allocated about 35% of its shares to retail investors for its IPO.
Wall Street has been keeping on eye out on revenue generated from payments for order flow and how much trading volume took place in the second quarter. The focus on crypto appears to have made up for any slowdown in equities trading following the meme stock frenzy earlier this year.
Maley will be looking for any guidance on the conference call about activity this month.
"I'm not worried if the second quarter was slower. That's well known. But if they're telling us that things are picking up in August, that should bode well for the third quarter and also the fourth quarter as well," said Maley.
Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre
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